Really, Huffington Post? Ridiculing an advance copy of a research paper because it has the wrong date? Grow up! This is the latest in a string of juvenile attacks on Carmen Reinhart and her sometime collaborator, Ken Rogoff.
The left has an unreasoning contempt for Reinhart and Rogoff, because of this study linking high national debt to weak GDP growth. That’s called “pro-austerity research.” In the world of Huff Po, economists do research to support political beliefs.
Giving equal time to the right – they hate this latest paper, because the authors recommend a course of financial repression. If Huff Po’s Mr. Gongloff had actually read it, he would have found much cheery “anti-austerity” news. Prof. Reinhart has written on financial repression before, without Rogoff.
As usual, the best approach is to ignore the media, read the paper yourself, and draw your own conclusions. The New York Times has decent coverage of reactions to the paper.
Assuming taxes ultimately need to be raised to achieve debt sustainability, the distortionary impact is likely to lower potential output. Of course, governments can also tighten by reducing spending, which can also be contractionary.
By the way, the earlier hated paper has not been “debunked.” Yes, it had some errors, but they were not material. What you saw in the popular press was politically biased. The authors never claimed that correlation was causation – although it wouldn’t be surprising. Does anybody really believe you can run national debt at 90% of GDP and not pay any kind of price for it?
Jeremiah has read a lot of Ms. Reinhart’s research, and she is very thorough. Check out her page on the NBER website. Most economists, we suspect, would prefer to discuss their research in peer reviewed journals without the glare of political attention.
No one gets fired from Harvard for saying that dinosaurs had feathers, or that Pluto is not a planet. What the biased press fears from economics is research that challenges a political position. Rational people will use new research to evaluate their opinions, not vice-versa.